ServiceMaster Reports Second-Quarter 2016 Financial Results

MEMPHIS, Tenn. — ServiceMaster announced unaudited second-quarter 2016 results. The company reported a year-over-year revenue increase of 4 percent driven primarily by organic growth at American Home Shield (“AHS”) and the impact of acquiring Alterra Pest Control, LLC (“Alterra”) in November 2015.

Second-quarter 2016 net income was $16 million, or $0.11 per share, versus $67 million, or $0.49 per share, in the same period in 2015. Second-quarter 2016 net income includes a charge of $88 million due to a tentative settlement of a fumigation related matter and an insurance reserve adjustment of $23 million, and second-quarter 2015 net income includes a $14 million loss on extinguishment of debt.

Second-quarter 2016 adjusted net income was $93 million, or $0.67 per share, versus $82 million, or $0.60 per share, for the same period in 2015.

Second-quarter 2016 Adjusted EBITDA was $203 million, a year-over-year increase of $12 million, or 6 percent, primarily driven by an $11 million increase in Adjusted EBITDA at Terminix. For the company as a whole, the Adjusted EBITDA increase this quarter reflects an increase of $21 million from the conversion of higher revenue, partially offset by an increase of approximately $6 million in technology costs, primarily investments related to the ServSmart SM initiative, and a $3 million reduction in investment income.

Rob Gillette, ServiceMaster’s chief executive officer, noted: “Our businesses remain strong. Our margins continue to improve as we continue to streamline operations, convert our Merry Maids branches to franchises and realize the benefits of operating leverage. This positions us well for future growth as we continue to invest in marketing, our ServSmart platform and build on our brand awareness.”

TERMINIX RESULTS. Terminix reported a 5 percent year-over-year revenue increase in the second-quarter of 2016, driven primarily by the impact of the Alterra acquisition in November 2015 and organic growth in pest control revenue. Adjusted EBITDA increased 11 percent, or $11 million, versus prior year, primarily driven by $10 million from the conversion of higher revenue and $5 million of other cost reductions, offset, in part, by a $4 million increase in technology costs.